Comments on: Update on our home situation

By: No Debt Plan

No Debt Plan — Tue, 30 Sep 2008 02:39:35 +0000

Eesh, still makes me nervous. Here’s to hoping your first house sells really, really quickly.

By: Lynnae

Lynnae — Fri, 26 Sep 2008 00:27:08 +0000

I’m glad you found a way to work it out! Best wishes with your move. And I’m so glad that I’m at the end of the process, rather than at the beginning. I’ll commiserate with you from the sidelines.

By: Mr. ToughMoneyLove

Mr. ToughMoneyLove — Thu, 25 Sep 2008 22:31:59 +0000

This is what happens when a purchasing decision becomes emotional. I think you are doing the best you can do under circumstances where emotions are driving your thought processes. I hope it works out for you.

Just FYI – I know how you feel. My wife and I have had deals on the “perfect house” fall through in the past. But you know what? Another “perfect” house always comes along.

Good luck.

By: glblguy

glblguy — Thu, 25 Sep 2008 21:46:49 +0000

Thanks for the comments folks and I appreciate the encouragement.

For those concerned, I got a 401k loan so no tax penalty. Getting a loan is different than a hardship withdrawal. I also did all the necessary math including factoring in the payments on the 401k loan. I can afford the payments, although it will stop the debt snowball until we sell our other house. I’m okay with that though, we’ve been going at it pretty aggressively for a while now.

@Dominique – I’d ask that you not assume I “want” this, there is a great deal of need behind it as well, but it’s a little more personal than I would care to share.

By: Going Gazelle

Going Gazelle — Thu, 25 Sep 2008 20:32:44 +0000

I’m kinda like Dominique – given the amount of people I’ve seen do the two-house payment deal, its not likely I would have came up with the the same solution. However, at the end of the day, we’re still friends. Gratz on the new house! Its called “personal” finance for a reason.

That 70k equity on Day 1 makes me drool. Ok your wife may shoot me for this question. But is there any chance you can find out the second buyers name and flip the place? 70k would go a long way on the snowball….

We need pics and more posts about the house!

By: David

David — Thu, 25 Sep 2008 20:09:05 +0000

Good luck with all of this, glbl. Its hard out there even for people with great credit/income to get a somewhat unconventional mortgage nowadays. That’s why we have put our house hunt on hold, as all my income is freelance and banks wont touch us right now! Good luck!

By: Dominique

Dominique — Thu, 25 Sep 2008 17:06:12 +0000

401k options is a horrible idea.. you will be taxed about 40% by the government all for something you “want” not necessarily need. There is no guarantee you will sell you exiting house, there is no guarantee you will find good tenants but there is a guarantee of penalty and fees from the government for your actions. And you’re justifying this purchase, this is no different from impulse buying. You cannot afford this home, you have to borrow to even achieve 5%. Focus selling your house before buying another one.

By: Gina

Gina — Thu, 25 Sep 2008 16:26:58 +0000

Oh, be sure to include the 401k loan payment in your budget! So you could be looking at Mortg 1 payment + Mortg 2 payment + 401k loan payment = total house payment.

By: Gina

Gina — Thu, 25 Sep 2008 16:25:09 +0000

I did the same thing (used 401k loan) with our current house – we bought it w/$10k in equity b/c it was priced below market value.

We got a 80-15-5 mortgage: 1st mortg at 80% with one bank-fixed rate, 30 yr term; 2nd mortg at 15% with a different bank-variable rate HELOC {you can write off the interest on taxes}; 5% down-negotiated closing costs to $2k and borrowed 5% down pmt from 401k. I got laid off 5 months later so I had to payback the 401k loan within 60 days. I received a VERY generous severance pkg – only used 15% of my severance pkg to cover that 401k payoff.

Took a month off from finding a job (had a 60 day non-working notice – still get paychecks but don’t have to show up to work); got the new house in order; found a job making $5k more the day after I received my severance check.

God did indeed provide for us! I will pray for you and your family.

By: Andrew Boyd

Andrew Boyd — Thu, 25 Sep 2008 14:40:08 +0000

The part that would make me most nervous: if you lose your job, for whatever reason, or want to leave your job, your company can demand IMMEDIATE repayment of the entire 401k loan balance! Have you looked at this aspect of the deal? I hope so, and good luck.